TORONTO: The Canadian dollar weakened to a six-day low against its US counterpart on Thursday, as investors weighed inflation risk and awaited jobs data from both the United States and Canada that could offer clues on central bank policy outlooks.

World stock markets stepped back from record highs as rising oil prices added to inflation concerns.

Oil, one of Canada's major exports, rose to its highest level since October 2018 at $69.40 a barrel before dipping below $69. It was supported by expectations for surging fuel demand later this year while major producers maintain supply discipline.

The Canadian dollar, which has been on a tear this year due to higher commodity prices and the Bank of Canada's more hawkish stance, was trading 0.6% lower at 1.2106 to the greenback, or 82.60 US cents. It touched its weakest intraday level since last Friday at 1.2114.

The US and Canadian employment reports for May are due on Friday. Economists expect Canadian employment to fall by 20,000 in May after plunging 207,000 in April. Some provinces went into lockdown in April to curb a harsh third wave of the COVID-19 pandemic.

Still, the Bank of Canada is seen tapering its asset purchase program again next quarter and raising interest rates earlier than previously predicted amid expectations for a robust economic recovery after a recent downturn, a Reuters poll showed.

The US dollar gained ground against a basket of major currencies as a strong US economic rebound threatened to derail the assumption that interest rates will stay low for a long time.

Canadian government bond yields were higher across much of a steeper curve, tracking the move in US Treasuries. The 10-year was up 1.3 basis points at 1.508%.